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Maintaining legal professional privilege over investigation material: Lessons for employers

01 April 2019

#Workplace Relations & Safety

Michael Selinger

Published by Michael Selinger, Georgie Richardson

Maintaining legal professional privilege over investigation material: Lessons for employers

In an important decision for employers, the Fair Work Commission (FWC) has upheld an employers’ claim for privilege over investigation documents that were sought by an employee during their unfair dismissal proceedings: Petrunic v Q Catering Limited [2019] FWC 1034. 

The facts

The applicant to the unfair dismissal proceedings, Ms Petrunic (Applicant), was dismissed from her employment with Q Catering after engaging in unauthorised industrial action. Q Catering sought external legal advice in conducting an investigation into allegations of misconduct, the nature of the investigation process and any consequential disciplinary action for employees who participated in the industrial action.

The legal representatives met with managers of Q Catering and took statements that were then used to draft letters of allegation that were provided to five employees involved in the industrial action, including the Applicant. Q Catering subsequently engaged one of its own employees to conduct the investigation into the allegations.

Fair Work Commission order requiring production of documents

At the request of the Applicant, the Fair Work Commission (FWC) issued an order to Q Catering requiring the production of all documents relating to the investigation into the unauthorised industrial action. In particular, the Applicant sought the statements of managers employed by Q Catering. The Applicant argued that privilege over statements given by managers to the legal representatives was waived, as the statements would have been used to formulate the letters of allegation issued by Q Catering to the relevant employees. 

Q Catering maintained that the documents were subject to a claim of legal professional privilege, in circumstances where the documents were prepared for the purpose of obtaining legal advice and/or in anticipation of litigation.

Senior Deputy President Hamberger agreed with Q Catering, finding that all documents consisted of confidential communications between Q Catering and its legal representatives for the dominant purpose of the legal representatives providing legal advice.  

Loss of legal professional privilege over statement

During the giving of evidence at the hearing for the unfair dismissal application, counsel for the Applicant requested production of a ‘witness statement’ (which Q Catering asserted was more of a file note in nature rather than a witness statement) in response to evidence given by a witness called by the Applicant. The witness statement had been provided to the legal representatives following the day of the industrial action. During cross-examination, the witness was asked whether he had made any notes of the industrial action, to which he responded that he had not done so, but had given a statement to Q Catering’s legal representatives. When asked what he said to Q Catering’s legal representatives, he replied that it was very similar to the statement that he gave to the investigator.

The Applicant submitted that what the witness described as the ‘initial witness statements’ given by the managers to their legal representatives were not confidential documents and were therefore not subject to privilege. It was further submitted that, in any event, privilege had been waived given that a number of the allegations contained in the letters of allegation given to the five employees came from information provided by witnesses to their legal representatives.

Senior Deputy President Hamberger accepted Q Catering’s objection to the Applicant’s argument and asserted the ‘initial witness statements’ contained very sensitive information that was used (among other things) to make decisions that could lead to disciplinary action against employees of Q Catering. However, the Senior Deputy President found the witness had knowingly and voluntarily disclosed his statement to the legal representatives during cross-examination. In coming to this decision, the case of Divall v Mifsud [2005] NSWCA 447 was relied upon. In that case a witness was cross-examined on a privileged statement and asked to reveal the substance of the privileged statement, which he did, and counsel for the party who called the witness did not object. The Court of Appeal held that privilege had been waived, finding that as counsel for the party calling the witness did not object to the questions, the statement had been "knowingly and voluntarily disclosed to another person”.

It was for these reasons that privilege was waived and Q Catering were ordered to provide a copy of the statement to the Applicant.

Categories of legal professional privilege 

The three separate categories of legal professional privilege were considered:

  • Advice privilege: attaching to confidential written and oral communications passing between a lawyer and a client, for the dominant purpose of the lawyer providing legal advice to that client
  • Litigation privilege: attaching to confidential written and oral communications made, or prepared, for the dominant purpose of use in existing or reasonably contemplated judicial or quasi-judicial proceedings
  • An extension to litigation privilege: attaching to confidential written and oral communications passing between a lawyer and third parties, or the client and third parties, if made or prepared when litigation was on foot or reasonably contemplated.  The dominant purpose for the existence of the communication must be related to those proceedings.

Senior Deputy President Hamberger was satisfied that, in this case, all documents that were requested by the Applicant fell within the scope of ‘advice privilege’ (albeit privilege was waived in respect to a witness statement). All documents consisted of confidential communications passing between Q Catering and its legal representatives for the dominant purpose of Q Catering receiving legal advice with respect to preparing letters of allegations, the nature of the investigation process, and potential disciplinary action. He was also satisfied that the documents were prepared in circumstances where legal proceedings were anticipated.

It was noted that if privilege attaches to a document, that privilege may be expressly or impliedly waived. Senior Deputy President Hamberger considered the key principle underlying the concept of waiver is that the party asserting privilege has acted inconsistently with the maintenance of confidentiality over the lawyer-client communication.  

The lessons

Legal professional privilege enables the protection and non-disclosure of communications between clients, their legal representatives and certain third parties in specific circumstances. It operates to allow and encourage forthright communications between a client and their legal advisors regarding appropriate legal options. This case highlights the importance of employers: 

  • establishing legal professional privilege over investigations and investigation material – employers should ensure that there are processes in place for commencing investigations and determine from the outset the basis upon which legal professional privilege is claimed. Establishing legal professional privilege allows for an investigation (and any investigation material) to be conducted on a confidential basis if the communications between a client and their legal advisers (whether in-house or external) are created for the dominant purpose of providing legal advice or use in litigation
  • ensuring privilege is not waived – employers are faced with the risk of deliberate or inadvertent partial waiver of privilege at all stages of the investigation process, and even at the conclusion of the investigation process, should proceedings be commenced. 

Legal professional privilege is an important protection and has value in enabling businesses to explore and discuss potential legal risks and mitigation strategies without fear of those communications being used against them in the future. It is important, however, to ensure the privilege is established correctly and maintained.

A copy of the decision referred to in this article can be accessed here.

Authors: Michael Selinger & Georgie Richardson

Contacts:
Sydney

Michael Selinger, Partner
T: +61 2 8083 0430
E: michael.selinger@holdingredlich.com

Stephen Trew, Managing Partner, Sydney
T: +61 2 8083 0439
E: stephen.trew@holdingredlich.com

Melbourne
Charles Power, Partner
T: +61 3 9321 9942
E: charles.power@holdingredlich.com

Benjamin Marshall, Partner
T: +61 3 9321 9864
E: ben.marshall@holdingredlich.com

Brisbane
Rachel Drew, Partner
T: +61 7 3135 0617
Erachel.drew@holdingredlich.com

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Michael Selinger

Published by Michael Selinger, Georgie Richardson

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